Virtual Reality is Transforming into a Niche Sub-Industry

Last month, we asked whether virtual reality (VR) is doomed to become a niche sub-industry, despite Facebook and other companies pouring billions of dollars into the technology.

When that article was published, Facebook had just unveiled its latest standalone headset: the Oculus Quest, slated to retail for $399 once it ships early next year. Although it isn’t tethered to a high-powered PC like previous Oculus headsets, Facebook claims that this new Oculus will support higher-end VR games. And “games” is the key part of that sentence, since Hugo Barra, head of Facebook’s Oculus program, suggested that the Quest is primarily a gaming platform.

That was before Facebook announced that it was ending Rift VR support for renting and buying non-VR movies via its Oculus Video service (Oculus Go and Samsung Gear VR will continue support). “Over the years, we’ve seen how people use VR for everything from gaming to movies, and it’s become clear that while people love to stream immersive media on other devices, Rift is used primarily for gaming,” read a note sent to users according to Road to VR.

Then, Oculus co-founder Brendan Iribe decided it was time to leave Facebook. According to TechCrunch, he left because he wasn’t interested in a “race to the bottom” with regard to VR headset hardware specs.

Facebook clearly wants virtual reality to serve primarily as a relatively low-cost gaming platform, and perhaps that’s the route to broad adoption. At the top end of the market, there’s still the HTC Vive; at the lower end, headsets such as Google’s Daydream, in which your smartphone serves as the screen. All offer a range of games, along with a few other apps.

But even virtual reality gaming might face a struggle. CCP, which built flagship VR games such as “Eve: Valkyrie,” has retreated from the VR market. “We expected VR to be two to three times as big as it was, period,” CEO Hilmar Veigar Pétursson told the media. “You can’t build a business on that.”That admission—and the corporate maneuver behind it—came as a bit of a surprise, considering how often Facebook pushed “Eve: Valkyrie” as a key example of what the Oculus platform could do.

Earlier this year, research firm IDC reported that shipments of VR and augmented reality (AR) headsets plunged 30.5 percent between the first quarters of 2017 and 2018. Enthusiastic early adopters snatched up their Oculus Rifts and HTC Vives, but that didn’t ignite a broader market. Perhaps that’s why Facebook has decided to drive down the price of headsets.

For the moment, virtual reality is very much a niche (and still gaming-focused) product. Those developers and other tech pros who thought that VR would quickly spread to the enterprise and other contexts might be disappointed. But those who love and create games might still see VR as an opportunity, albeit one that might prove hard to monetize.

5 Responses to “Virtual Reality is Transforming into a Niche Sub-Industry”

  1. I don’t think VR is dead. I think we are still waiting for third generation equipment. I think that it will be used broadly in a lot of different ways. VR arenas, businesses, training, education, and games. The technology isn’t there yet. Nor is the price. Saying VR is dead or becoming a niche market is silly, because in 10 years it will likely be everywhere. My Vive has an annoying tether and is heavy. The resolution isn’t so hot either (not the pro Vive). Fix these things and make them cheaper and schools and businesses will start requiring people to use VR. Give enough children access to something and they will find ways to use we never imagined. That isn’t happening yet. It is just a bunch of 30-40 year old white/ asian males. We are inching our way there. I bring my Vive to my junior high classroom on game days. Exposing children to VR is your best bet to a future market.

  2. VR and Augmented reality are just getting started. Strapping a giant theater to your head and being blind to the real world is a barrier to wide adoption at the moment, as is the lack of polish to the experience in general. Eventually VR and real time motion tracking will be everywhere, it just hasn’t nearly hit its stride yet. Create lightweight UHD screen glasses and seamlessly overlay the virtual world with the real and there will be no stopping it.

  3. VR is not dead, but the idea behind its birth, the idea of creating a huge market that would transform gaming… that idea, the ideal VR, is DEAD. What’s the reason, did you ask? This has been told one thousand times: 1. The price… not many people will want to try something that has a huge cost to their money. Today the price is not as high as it was, but it’s still high.

    2. The nature of the product. You can’t show good trailers of the games, it’s hard to do because the experience is hard to share with normal screens. And showing a guy with stupid glasses on his face is not a good selling strategy.

    High price and hard to advertise… VR is doomed and it probably will always be. Some companies are using VR for training purposes. That’s cool. but that is not enough to feed the tremendous machinery behind the development of its technology.